tv Discussion of North American Trade CSPAN February 10, 2017 7:22am-9:31am EST
[inaudible conversations]. >> thank you very much. >> next thursday, president trump's labor secretary nominee, andrew puzder, testifies at his confirmation hearing. mr. puzder appears before the senate health, education, labor and pensions committee. live at 10:00 a.m. eastern on c-span3. you can also watch live on c-span.org, or listen on our free c-span radio ap. next a look at the future of the north american free-trade agreement known as nafta. the washington international trade association hosted panels on the implications of renegotiating the deal. this is just over two hours.
[inaudible]. >> thank you, ken. [laughter]. it's, it's a real pleasure to be here this morning, and thanks to weda for organizing this very, very timely session on nafta 2.0. as someone who has been involved in the trade, war is too strong, debate is too tame, the vigorous trade discussions we've had in washington over the last 20 years, we're certainly at, even in scope of those discussions we're at an unprecedented moment right now awaiting to see the unrolling of the adminstation's new trade strategy. we have been, we've heard a lot from the president when he was a candidate, when he was president-elect. since becoming president we've
heard a lot about mexico. we heard a lot about mexicans. we've heard a lot about nafta. we heard a lot about china. we heard a lot about it. pp. a lot of things are going to be ripped up. a lot things will be done away with. a lot of things will be changed, yet we have little in the way of actual specifics that have come out. the president's trade team, some of them have been named, formerly named wilbur ross nomination is somewhere on the floor of the senate. they will get to him at some point as they march through a list of cabinet officers. bob lighthiser, ftr, he hasn't been set up, because he advised a foreign power at some point in his career. that be a block to serving. peter navarro at the national trade council. he has very well-known views
that relate to china. bob lighthiser that has very well-known views relate to china. wilbur ross has well-known views that largely relate to china. what is interesting sitting here at a panel on nafta 2.0, each of these men has said actually very little about nafta. so how exactly they will roll out and implement a new nafta policy is for the moment, unclear. we have the president's very strong statements, and for the rest of it, we're waiting. we know that rex tillerson met yesterday with the mexican foreign minister. we also know he met separately with chrystia freeland, the canadian foreign minister. the three of them did not meet together which is interesting.
we know pena nieto canceled a trip to come here and there are no plans for him to come. we know prime minister trudeau will come as soon as next week. kellyanne conway in a slip yesterday on the air let it out he may be here as soon as next week. we know that wilbur ross's name is soon to be on the floor of the senate and up and out. my sources close to the administration tell me that as soon as ross is in the chair, they will begin implementing their trade strategy and that ross will lead it. what we're going to do this morning with our really superbly-qualified panel, is try to give you an idea, as you walk out of here, both this panel and the next panel, of what the range of options are for what may come out of the new trade policy specifically for nafta.
will it be a slight change? will it be a total redo? how will it impact various industries. we hope to give you as you walk out today, a set of, a set of benchmarks, a ruler, perhaps, some rules of thumb to look ahead. so that you can advise our clients, advise your companies of the coming impact on nafta. the first panel is focusing on the broader policy issues. the second panel was an industry specific panel. our broader panel this morning i think you'll agree is superbly constructed to give us a variety of viewpoints. to my right is yuri dilush, noted economist, trade policy expert. he has written broadly and deeply about trade and globalization issues over the years.
to his right is matt gold, who is, was the deputy assistant u.s. trade rep for north america. so is deeply schooled in the mechanics of nafta, and also is a professor at fordham. so he will give us the legal underpinnings. what is the legal reality of what the president can actually do on his own. for what does he need congress? for what does he need an actual renegotiation. beyond him is thea lee, who is, for many years has been one of the leading voices from the labor movement on international trade and on nafta, and is someone who is extremely thoughtful on the issues affecting the labor community. she will help us understand labor's perspective on nafta renegotiation. and then to her right is antonio mena, long-timex can government official. long-time official here at the
mexican embassy. understands the, the u.s.-mexico relationship deeply. and he will give us the mexican perspective and perhaps the mexican responses expected, responses to what president trump might do. so with that we're going down the panel in the order in which we're seated here. each person will speak for five or six minutes. we'll get the conversation going up here. and then we'll turn it to the audience for what i hope will be, i fact i know will be a very, as they say in the legal business, a very hot bench with lots of questions and lots of hands in the air. with that, let me turn it to yuri. >> yeah, thank you very much nelson and ken. honored to be here with you this morning. i see three main scenarios for the new nafta. the first is a kind movedfied nafta with some new features but
also other features that are closed, closing down. i called this the nafta 0.9 scenario. okay? this is my main scenario. the second return to mfn trade between u.s. and mexico. they stay in the wto you but they trade with each other at arms length. the third is the border adjustment. >> would that be the nafta zero model? >> that would be the nafta zero i guess. there were other scenarios, but that that is the nafta scenario. there are other minus scenarios. that is the nafta scenario as you call it. the third the border adjusted tax you had a event, beautiful event couple weeks ago i which i think has major impact on nafta scenario. so you can't just ignore it. . .
improvements at the border and communications. energy collaboration etc., all of the cement aired so, i would say that nafta 0.9 would have several of these, but clearly there will not be enough to satisfy the objectives for the us negotiators. what are these objectives? they are to reduce the $60 billion trade deficit with mexico, design for exports to the united states whether it's by american or foreign companies, and make it at least look like mexico is paying for the wall. this was-- this is what i would
assume is the negotiations behind the scene. to achieve these objectives without lifting nafta rules and us laws. the main option available, apparently is to make the rules more rigid as to prevent-- [inaudible] >> also, safeguards, but that is tinkering of the margin. even that may not be so easy to do in negotiations. contrary to the common view, this will not be a one-sided negotiation. mexico depends on the united states in crucial ways, but the united states depends on mexico, also. industry such as automotive's in-state like mexico is very dependent on mexico.
a 40% of us imports from mexico consist of products originating in the united states in the us trade balance is just one aspect of the relationship with large affiliate sales and mexico. there's a hundred billion dollar plus investment in mexico. all of this could be targeted in retaliatory situation. so, let me move to the second scenario. trade negotiations right now, then the us could raise its wto means producing a 3% tax on average. mexico could stay within the wto rules with a percent on average and very importantly raise its
tariff on agriculture to 20% hurting a lot of people. i think it's clear that mexico hurts the united states as much as the united states hurts mexico in the second scenario. that takes me to my last scenario-- be patient. on the border adjustment tax, you cannot ignore and say we had an effect-- event last week so we won't discuss this. the border adjustment tax has many attractions politically because it's a measure that looks like it's might be trying to consistent like a value added tax, but it actually is not at all trying to consistent. i'm an economist. it is not at all wto consistent.
it does give the us cover for staying in the system while education takes place. lets me say unequivocally that the border adjustment tax is worse in economic terms then scenario number two. it effectively implies a 20% tariff on canada and mexico and on everyone else in the world and it applies a 20% export subsidy on canada against canada mexico and everyone else in the world. this is a massive discussion of the us economy. proponents say the changes will adjust. my experience from having tried to forecast exchange rates for 40 years is that no one knows how foreign exchangers will adjust.
what's of the border adjustment tax might do is to allow the administration to say that mexico is paying for the wall and the jobs are coming back to america and so that's why you cannot rule out the value. >> good. thank you. now i'm to to gold to talk to us about what the actual law is. >> thank you and speaking of actual law i agree that there is no possible way it can be done-- it has been described wto consistent and would violate both export subsidy rules and rules relating to national treatment for internal taxation, but getting back to nafta. i think with respect to all of president trumps trade proposals in the proposal to renegotiate nafta the first question you have to ask yourself is if it were that easy why hasn't it been done already and on the campaign trail the application
was because every administration before was either incompetent or corrupt. if you're someone who knows that's not true and i think most of the people in the room no that's not true guilt as yourself wait a minute, if it's this easy then why hasn't been done before. as was mentioned i can tell you mexico, canada and the united states have all wanted to change a certain things in nafta and although there have never been formal negotiations we have been in impasse or 23 years and there are things of mexico would like to change a thing's canada would like to change. no american administration have been prepared to give them concessions and they are not prepared to give us hours and that's why there's never been negotiations to renegotiate nafta. enter president trumps and the
question then is what has eat introduced that will change that dynamic. of the answer is he is threatened to withdraw from nafta does that change the dynamic? if it's credible it does. i would argue that there is not credible and although the population of a free country believe he's serious i don't believe he serious and i would be surprised with the leadership of mexico or canada or their trade official believe he's serious and as a consequence i don't think the dynamic has changed. i think they will be very diplomatic with president trump and our administration is they have to be, but i don't think there will be a serious negotiation of nafta. the united states and canada have the largest trading agreement and mexico is our
second largest export market and we have so misapplied change that would be severely disruptive that it almost sends one had trying to wrap your brain around it. the-- in the short run the disruption would be worse. we have not had a huge public outcry. we've had a lot of nervous sectors and other groups, but we have not had a huge public outcry because everyone has been rolled into this feeling that he won't really pull out of nafta and he is just saying to renegotiate, but that has up to the threatened to renegotiate not be incredible. if or when the talks to read goucher it are fully stuck in the mud and president trump is actually withdrawn from nafta i think there will be a public outcry that won't only shape the administration, but congress. last thing i will say on that subject, even if president trump were to withdraw from nafta,
which he has the authority to do he's only pulling out of the agreement. unless congress repeals the nafta implementation act not much happens on the ground and congress will have constituents throughout the country screaming. i just zero see happening and back to the more complex-- >> i went to sharpen that because that i think that is something that was really highlighted in our discussions that i want to be sure everyone in the room understands, your perspective on this is that if a present withdraws from nafta and congress takes no action, in effect nothing changes for the companies that have relied on nafta in their cross-border trade because everything remains the same. the supply chain issues import quotas all remain the same. is that correct? >> initially everything remains
the same. initially nothing. >> unless congress acts. >> by the mere withdraw from the agreement. congress obviously can change anything revising the statute. of the president himself has some delegated authority by which he could roll back some of the now-- implementation, but feel a part of it the authorities are questionable in different areas and it's a complex area, but congress issued a report in december 2016 which lays out the different authorities. they only really for a small tariff, not to any of the nontariff areas which are 300 pages of commitment we have a nafta and his authority and tariff is-- i could go into it in great detail, but we don't have the time. >> the point is that if congress declined to act and mexico and canada declined to come to the negotiating table, no matter
what president trump does other than the tariff authority, which is limited, the rules of nafta that remain for north american companies that have benefited from it. is that your perspective? >> correct, i mean, again if president trump did commit and use the tariff authority and raise tariff there would probably be a reaction mexico. >> and that's part of the scenario we are doing here? >> yes, but just majority from the agreement itself, that act alone changes nothing on the ground. that's why we are still fulfilling every one of the terms on nafta including the main terms and the other 300 pages of terms as well. we are still doing all of those and it's highly likely mexico and canada would continue to do those in reference with us. if everyone could keep the discipline and also the president did not use is limited authorities that could save face to the end of the president's
term. anyway, to finish up, all of this leads me then to the fact for the lack six months i've been predicting that the renegotiation of nafta is more of a fantasy than reality and might never be more than a reality. look at what happened in the last two weeks because i see a lot of things going on diplomatically and i infer what's going on by the seas and i see a different picture with what's going on in the last two and a half weeks. first, no trilateral work no one seemed to notice that. nafta can only be discussed trilateral summit or mr. uriel or talks. it's not even remotely possible to do it in a bilateral level and even if president trump wants to negotiate bilaterally he's not at that stage. key west to try first to renegotiate nafta, but apparently mexico and canada have not agreed to a bilateral
summit and keep in mind every year we have a trilateral summit and its round this time year and we also have a mysterious nafta free trade commission and it neither of those are scheduled that i'm aware. all we have are to bilateral summits planned for the first month of the presence office. second. what's on the agenda? these staffers are negotiating the agenda in a joint statement for the summit. that's the leaders communicating through the staffers. i would have predicted mexico would not have agreed to put any particular provision of nafta on the agenda for the meetings that was supposed to happen this month, nor would they agree to put any provision on the joint statement in terms of agreement to negotiating the different positions of nafta going forward. what are we actually publicly? first, as we got close to the senate with mexico the president
answered a question about the agenda and he said border security and immigration. in other words no nafta issues. second of all, then there was no summit. now, if you think the president of mexico made that decision then you are not paying attention. president trump made a statement that he knew would cause mexico to pull out to. i think when he answer the question about the agenda he was floating the reality that he would be embarrassed that nafta would not be on the agenda to see what the reaction would be and i think whatever feedback he decided he did not want to have the summit and i think he then engaged in typical misdirection and in the summit make it look like mexico pulled out and look like there was nothing to do about nafta and the fact that he's never had the power to renegotiate it and he's finding it out for the first time. >> sort of a non- reality? >> yeah and now comes canada. january 23, sean spicer
announced justin trudeau would be here" 30 days or so, but they didn't have a date's. if you don't have a date for a summit than you don't know there will be a summit. second, since that time we haven't heard a word about dates for the summit. third, mexican president backs out. this is the first leader that stood up to donald trump, so now what will justin trudeau do? this is a classic bully scenario. is the first kid that stands up to bullies and suddenly has the other kids coming to his help, the dynamic changes for the rest of the presidency. justin trudeau is really seriously at a tipping point now and all the sudden we don't hear about when the summit will be. now it's widely reported justin trudeau is going and talking to european leaders to talking about his strategy of how to manage donald trump.
still hasn't given a date. now, the trump people are getting nervous because they will be embarrassed again if-- eventually they have to have a meet and greet. it's canada. he doesn't have to agree to put anything about nafta on the agenda if he doesn't want to, so all of a sudden we have an announcement because there is pressure to say when the summit will be an yesterday kellyanne conway-- that was not an accident-- yesterday kellyanne conway said well, we think he's coming next week. all of that, i think, is the administration's way to put pressure on justin trudeau to come to the summit. they are raising the stakes and making a high profile question so if he doesn't come the stakes are bigger. at this point if he doesn't come-- he will eventually come, but if they turn around and say marsh looks pretty busy-- >> winding up.
>> , at the end. 's-- i'm at the end. ic already this forward more should-- motion of nafta getting stuck in the mud. >> well, that's a fascinating set of scenarios. we turn now to an inside person and outside person nafta. you are about your wish? >> or am i. good morning and thank you to everyone for the invitation to be here. it's great to be part of this distinguished panel. as nelson said the labor-- labor movement has been very engaged and even with respect to nafta
this is something we were engaged around the negotiation of nafta trying to improve it, change it. remember what the slogan at that time was not this nafta because as i have been saying i have seen some of you at these panels before in the labor unit is not actually gets localization or trade, but we have a strong critique of the exact set of rules embedded in trade agreements like nafta, like the wcl and many other trade agreements since that time, but with nafta we engage in negotiations and oppose the ultimate agreement. we use the agreement when it was in place and particularly the labor chapter, dozens of times over the course of the last 20 or so years and it was a very frustrating time because i think everyone knows of art critique of the nafta agreement is that it was not enforceable, provisions were weak in the design not to be used and i even
think the negotiators would tell you the nafta labor chapter was designed not to be used. it's fulfilled that promise well. we have also criticized the nafta template and i think that's what i want to focus on because i think we have one question in front of us, which is will nafta be renegotiated if at all? should be renegotiated? how should be renegotiated, but the bigger question is what does the nafta debate mean for our trade policy? what should be the principles that guide our trade policy going forward and i want to talk about nafta, but i also want to what does it mean for all of us as we think about these important issues and i do want to say that there has been for the labor movement, but not just the labor movement a lot of our allies in the globalization debate, the environmental groups and consumer groups and women groups and some of the development of immigrant rights
groups. these are the groups we have been working with not just in it united states, but internationally because the labor movement believes in international solidarity, trying to write a set of rules for the global economy that will be good for workers everywhere and that's one important difference between the way we approach these issues in the way the current administration does which is we don't say america first. we don't believe countries are winners and losers. we want to talk about what kind of a global economy do we want to live in. what kind of protections for workers, the environment, consumers would be necessary to have trade policy benefits-- benefit communities and workers uncertainly in the united states creating good jobs including in the manufacturing sector? that's a different set of questions rather than just how can we get more free trader get
the barriers down or what kind of protections for investors to need in trade agreements, so that goes to the heart of what i want to say. we set a long time ago that nafta was not only about trade. it was about investment and protect them for investors whether the dispute settlement or property rights or financial services matter and also about outsourcing as much as it was that exports. at the today if you look the trade flow there wasn't really as much exporting of consumer goods, 90 million consumers on our southern borders as has promised. nafta failed to live up to most of the promises made on their behalf around 23 years ago. instead of exporting a lot of consumer goods a lot of american companies took advantage of nafta to move jobs to mexico and bring goods back to the us and that's why our truck small trade surplus-- we also said the investor dispute settlement and betting that into a trade
agreement for the first time was a bad idea and it would be used to challenge the legitimacy environmental and public health regulation in all three countries and i think the record has shown that has been the case , that nafta was used in a way that wasn't about trade so much, but also about corporate interests. nafta was supposed to strengthen the competitiveness of the north american continent the asia and europe. certainly for the united states that did not work out. our trade deficit for the rest of the world went way up, so in a lot of ways it failed. how could nafta be improved? i want to late out we collared nafta blueprint. it something that we are working with members of congress on and a lot of allies. we think we should live and eight dispute settlement, strengthen and enforce the labor and environmental provisions in nafta.
of these are provisions that have evolved over the years, but have never really worked. we have brought a lot under the labor chapter and yet there's never been a dispute settlement case, never been a enforcement mechanism that made a difference there, so that needs to be done. we need to address current manipulation. having trade agreements that discipline tariffs and subsidies and other trade flows that don't address currency at all is a weakness. we want to upgrade the rules of origin. we have concerns around the chapter and how it prevents the us government from using its purchasing power to achieve its goal and upgrade the trade enforcement chapter and address concerns abound trekkie to make sure safety is paramount. tpp, let me be clear here.
i think people have to remember that one of the things we learned and i think we should have come through this election about-- without learning something, which is there was a ground flow of opposition to our current trade model and the kinds of changes we need are these, not shallow at tweaking. we need to rethink the basic principles of our trading policy and in some of those areas we have outlined some top notes i think we would agree with that we be-- should be concerned about outsourcing, about how trade affects good jobs in the united states of america, but what i think is missing from the weight president trump outlined his concerns is that we are part of a rules -based and we need to be part of a rule base system.
the labor movement has demonstrated we will work with them to convince our governments , commencement congress to work with unions and environmental groups in other countries to work with their countries to change the rules we disagree with, but not to talk them out and work at an arbitrary way, but also working away that reflects respect for our trading partners and a sense of the importance of global solidarity. in terms of immigration-- localization is about trading goods and services, but it's also about the movement of money and financial flows across borders and about people, so one of the biggest concerns of the labor movement has-- it is the immigration policy and whether those are demonstrating the kinds of principles we want to see in terms of our interaction
with the rest of the world. we need to be sure main. we to be rational and we need to make sure at the end of the day trying to put a lot of the table so we have room for a lively discussion. i think-- we believe in a rules -based system. we believe i mean ultimately trade agreements and trade rules are about the intersection analogy of democratic decision-making with international movement of goods, services and people and money and we in the labor movement have said democratic decision-making is more important than that, so maybe we haven't gotten the balance right of whether we need to have trade agreements that can undermine our domestic regulatory system, undermine labor rights and
environmental standards for consumer protection and so with respect-- i think also with the way we address regulatory coherence in our trade agreements we have not done a good job. we have not found the right balance and i would say, i think a lot of people in the dc trade community are used to thinking of the critics of nafta or the critics of ttp has the enemy, but i would say to you i think we actually have a lot in common in the sense that we once to figure out how we can fix the trading system and the rules of the trading system. we believe it is important to take into consideration with the impacts on jobs will be of our state college and it shouldn't the only donald trump who says it will be leaders about the democratic and republican party whether they are presidential candidates or whether they are in congress and to the extent
that we can build together international framework for national trait i think we will be in a stronger position than if we stick our heads in the sand and pretend nafta has been a success in all we need to do is to pick it right back up and move it forward as is. we need to recognize issues of the problems that have been clear over the last couple of decades. >> think you. shortly after the president's inaugural he called labor leaders to the white house and they emerged with smiles, which is not typical between labor leaders and republican presidents. do you feel that you have a good dialogue with the administration on the trade issues and are you able to offer your input to a process? >> we do have a dialogue and we will continue to use whatever avenue.
we-- our job is to advocate for american workers and we will do that. there has been outrage there's been conversations and as i said, i think we might agree that our current trade system is broken, but we don't necessarily agree on what the narrative is for how to fix it. those are areas we want to continue to engage and offer our views and the one thing i would say for example in terms of what is wrong with the us, why is the us not as competitive as we would like to be into the extent that trump administration said the problem is where overregulated, taxes and art to high-end workers wages are too high. we would have a fundamental disagreement with that. we don't think that is the source of the problem. >> to paraphrase your famous
novelist for mexico so far from god, so close to the united states. [laughter] >> you no longer speak for your government, but you obviously did for many years and you understand this dynamic as well as anyone. how do you anticipate mexico responding to president trump? >> thank you. as you say, i no longer speak for the mexican government, so i'm speaking to my own behalf, my own opinions and i'm very glad to speak my mind. i want to give a sense of what i believe is at stake in its-- and then get my own views of some different scenarios. first of all i think it's much more than trade at stake. i guess there are a lot of trade
policies, msn and all of that and that's fine, but what's at stake here is the future of the bilateral relationship. the future of the relationship between mexico and the us and i believe that is the most important relation for the us on a day to day basis. there might be a robust state here doing-- a crisis there. there's always a china, but in a day-to-day basis for americans, for prosperity of security i believe there is no more important relationship. so, when there's talk about the wall, it's not about a great album by pink floyd. it's something different and when there is talk about who's going to pay for that wall-- >> for the younger members in our audience, look that up. >> i strongly recommend what you
think about the law, there is a great section about pairing down the wall, okay? it's-- it really generates eight toxic environment and with their ingenious proposals about how to fund the wall, will it be a border tax, will it be taxing, will it be taxing real estate transactions by mexicans in the us? regardless of whether these initiatives are approved by the congress, regardless of if they are legal or not and i do believe all of those to be inconsistent, they create a life of their own. words matter and mexico will have a presidential election next summer. campaigns will start a few months before that. we have a very noisy democracy. we also have a congress and this
political environment in the us is making it increasingly difficult for the mexican government to achieve a constructive negotiated solution with the us. i believe as time goes by the acceptable solutions are getting smaller and smaller and smaller. i hear a notebook called distant neighbors written by alan risings in the mid- 1990s and they quoted that people want a context about what's going on i would recommend to read this and then they read something more recent like shannon o'neill's book called two nations indivisible. she has some actual factual facts if you want to take a look at that.
so, a lot of it is at stake here. what scenarios do i see? i think that is the most likely scenario would be one where there's a nafta upgrade, a modernized nafta and for mexico the starting-- i don't see why mexico should accept anything less than tariff free, quota free access availed upon it. maybe include some provisions on energy. there are huge investments in energy, deep water as an investment. exxon mobil corporation. i don't see why the us would think it's a bad idea to have exxon mobil invested deep-sea oil and mexico and to have mexican oil shipped to the us, friendly countries. energy, telecom, e-commerce and labor on the environment.
there is a very vocal and vibrant civil society and mexico and i'm sure they would welcome real and serious commitments in labor and environment all issues perhaps, even rules of origin that could focus on regional productions. what i don't see viable is a full renegotiation of nafta starting from scratch, having mexico except less than it already has. if that is the scenario, and if negotiations-- a better alternative would be to say we will go down the amazon route. again, recall that there will be presidential elections in mexico. next summer i don't think the summer 2018-- i don't think that negotiations can go on endlessly
for political reasons. you have some very-- respected mexican leaders and last week in the "washington post", my former boss was trade minister during the nafta negotiations saying no agreement and msn is better than out that agreement, better than managed trade, quotas, so i think that is something the us should be very cognizant about from a more proactive perspective. the us is interested in the big structure programs. why not focus on north america and the structure? if you look at international rankings, railroads, ports, airports, north america does dismally, i mean, not one of the top 10 airports or ports are in north america. that is no way to compete as a
region, so not why-- why not focus on north america infrastructure and let us companies build in mexico and mexican companies in the us and canada, i mean, i think we need a reality check and lastly, according to some estimates about the world in 2050, mexico will be the number six economy by 2050. i do not understand why the us would want to make trade and investment more difficult with a nation, which could very well become its main partner, main destination for us attack sports. one of the main investors. it just boggles my mind. to be frank and hopefully warned us companies will speak loudly and clearly.
i know they don't want to be the object of a tweet, but this is not a zero sum game and there are specific stories to tell about why us investment in mexico benefits the shareholders of companies that are publicly listed, benefits workers in the us. how the supply chain works and why it makes sense from a us perspective, so i would invite and encourage, otherwise we will always be playing a defensive game and we will be in deep trouble. >> we only have about 20 minutes a left, so i went to turn to the audience quickly, so think about any questions you may have. we have missed one important thing, topic each of us in our discussion, which is why has president trump-- candidate trump and president trump, why has he made trade, why has he
made nafta one of the key signature issues in his campaign and of his new administration? i believe it's because he has a deep political project in mind, which is to remake the republican party has a party that will be the party of more populist party and the party of the working man and a to come up with the strategies that will bring them over from there typical loyalty to the democrats to a new loyalty to the republicans. clearly, if you look at how he won ohio, pennsylvania, wisconsin, michigan, key states i gave him the presidency, it was because of that appeal. if he looks to his reelection, he wants to submit his relationship with those voters even more strongly and that suggests to me that sort of a tempted massaging of nafta as an announcement of victory may not
be what he's going for, that he's actually going for something more radical, more dramatic that will speak directly and meaningfully to this constituency he's trying to attract, so with that provocative, let's turn to the audience. when you speak, please tell us who you are, what's institution you reside, put it in the actual form of a question and remember, we do have c-span here, so your mother might see whatever it is you say at some point. with that, we will turn to you, sir. >> the keystone of this discussion is that nafta-- >> not the keystone asked-- xl. >> i didn't mention not, i meant that essential elements, the basis of nafta has been a failure and is evil and has to be corrected and a wonder if
there is anyone on the platform that can make the case for nafta in some aspects it's been quite beneficial to both sides. >> great question. you are the two most likely. >> hello. well, in a nutshell, mexico's economic performance is disappointed. compared to the integration of many relatively poor countries into europe, the growth of mexico etc. has been disappointing. a lot of it has very little to do with nafta and has more to do with governance, issues and mexico, mainly governance issues in mexico. i would argue those would be a sequence of crisis in mexico,
which has to be taken into account. as far as the united states is concerned this is a giant economy of which trade is not the biggest part and trade with mexico is significant, but simply will not-- can virtually not in terms of the overall statistics, acceleration growth or anything like that. nevertheless, there has clearly been a huge increase in trade, and since we are operating in a free market i think you can fairly assume that a lot of the trade is beneficial, at least to those we engage in. final point is that-- yeah, i should add without question that trade has enabled some companies in the united states in
particular the automotive companies to become and remain competitive on the global market. finally, i would say that the affect of-- the big effects of nafta, unfortunately, distributive. we have to look within the countries and i would argue that there have been significant benefits for american consumers and mexican consumers, but some people have lost out and if this is clear. >> when i was working for north -- i used to say that the american people are divided. half the american people blame nafta when it does not rain for five days and the other half blame nafta when it rains too much over a five day period.
street things are important. first of all the agreement improved the economy for both countries and second the majority of manufacturing jobs we have lost and we have lost tens of thousands of manufacturing jobs since we entered tactic, but they were lost to automation, not trade. we were able to bring in very large number-- a larger number of better jobs and other sectors. although, the individuals who lost jobs in manufacturing were not geographically or otherwise positioned to take the incoming jobs and certainly there are so many disappointments with nafta and silly things we would like to improve, so we things i could be better, but on the whole overall it was truly a great thing for america and the last point is that if you ask any national security expert what are the four biggest national security assets of the united states 100 out of 100 will tell you they are the atlantic ocean,
the pacific ocean, our relationship with canada and our relationship with mexico. americans do not even begin to comprehend the cost of having a contiguous neighbor that is hostile or even unstable. in europe they get that and not just because of the world war centuries before. in asia they get that also had america's sometimes don't grasp at. i don't want to play down the economic of the agreement. we although individual region and sectors were hit and hurt, but i think america is much better off with nafta than without it. >> yes, i believe-- nafta is born economic policy, so in terms of mexico us relations, it is absolutely essential, i
believe it to be a factor that mexico in the us sink or swim together whether they like it or not. may be at some point the us or mexico would like to move to a new neighborhood peer could no do. you cannot do that. we are stuck there. again, the 1980s, a book a marriage of convenience. here's a marriage where you really can't divorce, where you are stuck in the same house or apartment and you have to engage constructively. there's no way out for both countries and i think this is good. i would say so far from god, so close to the us. it's good we are close to the us, but the political environment to restate the is so toxic.
in it terms of just the economics itself i would say that nafta created a strong area of rules of law in mexico and that is good for the us and that is good for mexico and what we need is more rule of law and mexico and nafta represents rule of law and transparency and accountability. in terms of us interest, the next time someone is speaking from the dairy association i'm sure corn producers, pork, beef, just the agriculture-- >> we will be hearing from them. >> we rely on mexico. >> rising in defense of nafta? >> i know you do not expect me to answer this question, but it's okay. thank you. i appreciate that. i mean, i just want to say that i think we need to separate out some things. one thing, want to stipulate that the value of the us relationship with mexico and
canada is paramount. i agree with that, that we need to value that and treasure it can take care of it. i also agree to a trade has gone up between the us, mexico and canada. is that the right benchmark? we really do need to look at what's in nafta, not what-- not the aura we have given to nafta because if you look at the actual components of it in some ways some of the smallest pieces of it most economic, but the intellectual drills property rights, what happens to prices for pharmaceutical products and also the rule of law. let's talk about labor law. one of the most important things we could have done if we really wanted to tie our economy to mexico with and to protect mexican workers rights to organize unions in an independent and democratic union. we do not do that under nafta and that's one of the reasons
why if we looked at the benchmarks, no one cares about the total volume of trade because that's not what people wake up thinking about. they wake up thinking about their jobs, wages, living conditions, safety of their consumer products and on that front mexico-- nafta did not nafta did not fulfill the right rule of law of making sure workers could exercise their fundamental human rights at the workplace without fear of arrest or violence or being fired and so that is the failure of nafta that it was the wrong rule of law. >> we have about seven minutes left, which is nothing, but it's what other questions do we have out in the room? what i would like to do is take two questions and we will do them out once. this a gentleman here in the front and then gentleman here. >> hello. mr. gold, interested in your
analysis of how withdrawal may or may not occur by executive action. seems to counter conventional wisdom on the hill these days and they may not realize they would have a role to play. i know that subsequent agreements like the korea agreement there is section 107 that actually said if the president withdraws legislation-- funding legislation goes away and also in the original fast track of 74 that says these are executive agreements and the president has the authority to enter or withdraw into them. let's imagine an example where this administration plays a fast and loose-- >> your question is? >> for withdraw, how does that play out and does that need-- lead to another court challenge. do we need congressional fortitude to stand up to this? how does that work out?
>> that's a targeted question, so let's answer this one now go to the second question is. >> i can make that quick. i'm not sure. as i said that topic is far more complex than we have the time to wrestle with here. we can talk it afterwards if you like. >> you maybe have a topic for your next event, which is the president's legal authority as it exists in the role of congress. >> back to answer the question, i'm not 100% sure it goes through the possibility and is far beyond what we have time for here, but it's a next line question you are raising and it's an issue. >> right over here. >> great to have you back in washington. two quick questions. one, a congress-- >> remind us who you are. >> stephen lanning, manchester trade.
one,-- question one is that economists have a point saying mr. trump said i always asked for the extreme, but i'm unbelievable when i actually agree to at the end, how much i compromise. where do you think trump will have a compromise in nafta? secondly, there was a glib this week about how well the extremists have done in european politics and also pointed to mexico with the leftist candidate went up seven or 8% and the current president is very low. do you think if this continues we will see a much higher percentage among the mexicans? >> thank you. antonio, why don't we start with that one. >> i would say the president has low levels of popularity. some people estimate about 12% approval rate, but high levels
of political support. i haven't seen mexicans united to such a degree since maybe the national oil industry in 1978. i wasn't there, but i'm using that as a precedence. this is something pretty unique, but that support comes with a cost and as i mentioned during my remarks the wind sent of acceptable-- politically acceptable solutions for the mexican president is getting fairly slow. you rightly point out that the leading opposition candidate is doing very well in the polls and relations could be much more complex and problematic between mexico and the us, should that person be elected. one quick remark. i hope that the us decision-makers do not take mexico for granted.
when i was working for the mexican embassy we tried for years to reach and negotiate a settlement over a cross-border trucking dispute. when we exhausted all options, we impose trade sanctions on the us, which were validated by a nafta panel and suddenly a members of congress discovered mexico was vital for their experts, our cultural goods, manufacturing and sometimes people appreciate something when they lose. i hope we don't wait until that. >> the other part of steve's question? where will trump compromise or will he go for the doomsday scenario or will he massage and declare victory? >> i don't think there's an absolute answer to that question this is a game. it's a complicated game and it
will depend critically on the willingness and ability of your trading partners to retaliate and to make clear that they will retaliate and second it will depend critically on the ability of those in the united states who clearly are going to lose out from a collapse of nafta to make their voices heard, so there's no absolute answer. fortunately i'm an economist, but i have to reduce it to this. you have to have guts. that's what it's about. >> one of the things both donald trump and peter navarro have been clear on is that they hate multilateral agreements and they want bilateral agreements. navarro in this interview he gave last week said, ttp is not dead. west at is the multilateral
agreement. we will have bilateral agreements with the countries with whom we have trading relationship. think about that in the nafta context. it will be very easy for trump and trudeau to sit down and have a bilateral agreement. not would we ever solved softwood lumber or some of its other, maybe not, but you could easily see the two of them reach a agreement because the trade between the two countries is balanced and from steve bannon perspective, canada looks a lot like as. on the mexico side, i think, maybe no relationship. may be no nafta have a no agreement with mexico. a us canada trade agreement and with mexico nafta zero. >> i think if president trump really wants to and nafta one way or another he will
eventually get their. i think if he really wants to renegotiate it, the biggest mistake can make is to forget that canada and mexico has equal voices in the conversation and he will be making that decision by himself. >> anyone else want to? >> on commenting to say i don't know. what ends up happening or where the fault line is, but i think it would be a mistake to not take this competition seriously because there is a lot at stake and the labor movement is going to wait in. we are going to outline the issues we have had. i don't know where it ends up, but you see deliberately within the trump administration that there are conflicting voices. you have the goldman sachs, chamber of commerce and less
populous voices and at the moment it seems like everyone is jockeying for position and may be in six months they will be a bit more clear which of the forces will dominate. >> i believe mexico is thinking us conversation seriously and challenges faced seriously and it's trying to come up with solutions for that where there is a win-win solution. i actually believe that trade is a positive sum game, so we are trying to find solutions for real problems. i also know that mexico will not accept a bad agreement. i don't think the us should be thinking along those lines. that's a real discussion. >> thank you, nelson. thank you to the panel. we are not having a formal break. we will swap out the panel and it will take about a minute and a half.
>> can everybody please take your seats? were going to be getting restarted. >> thank you all for joining us again today. our second panel is going to have a more specific industry take on different sectors of the economy and the thoughts about nafta. pleased to have a couple of my way to board members, ralph and doug part of this panel. thank you all again and with that i will turn over to doug from pfizer. >> thanks and good morning. thanks for being here this morning. the problem with leading the second panel is that no matter how many profound and insightful thoughts you have in the shower this morning, they've already been said and there's really nothing else you can do except
desperate attempt to tell a story about the time i found myself woken up in tijuana one morning during spring break. [laughter] which i'm not going to tell that story. i have a better one about running the québec marathon. when i worked at -- data wise boss who once told me after i gave up particularly negative view of something you may bent on the may 10 agreement, he said you need to be resolutely in search of optimism. no matter how bad the situation is you need to find something to be optimistic. while that may be difficult the last couple of weeks and months as we've seen president trump promulgate a trade agenda that's very different from one of most of us have spent the last 10, 15, 20 is working on. at the same time think there is some positive things to look at. if you look at nafta and nafta 2.0, and if we have this panel, i hope you're not using negative to describe nafta, what we look at is the idea that nafta needs
to be modernized. i think that came up in the first battle. people are saying look, if nafta were an appliance that would be a 25-year-old harvest gold cove? white what is one of those cool new whirlpool refrigerators that has internet access the keeps my milk cold. so that's what we want from nafta. there's a lot of opportunities here, both with canada and mexico together or separately to try and sort of improvement areas that either were not imagined 25 years ago like the internet, or at least it wasn't widely available, or supply chains that are changed because of technology, productivity, efficiency, overall rise in economic growth in both, all three countries. i don't think we want to get into either a mexican standoff or donating equipment which, of course, is two people holding
the door for each other. [laughter] i'm half canadian so i can say this. the reason they have roundabouts in canada instead of four-way stops is because otherwise traffic would do gridlock. sorry, i'm not here to do stand up on just the moderator. i'm going to introduce my panelists and let them talk instead of me. first up will be -- from the united association, and ralph from fedex, michael from international dairy foods association and tara from whirlpool. therefore wiles are in your handouts and don't want to take any time extolling the virtues buffalo sabres are all very smart experienced people, government and private sector experience and they will tell us what's going on. spenspin great, thanks, doug and thanks for putting this on today. a great opportunity. as we can see it's clear folks working on critical end up no lack of work in the coming year and this new administration.
so actually good to see a lot of friendly faces here. so real quick on the internet association, we represent over 40 of the u.s. leading internet companies. we are across the board e-commerce, cloud, search, sharing economy. we represent a really wide number of internet companies that are all over the world. and who are really working to advocate for policies that enable a free and open internet globally. so with that on the topic that were speaking on today, nafta, when it was negotiated 25 years ago that was before the advent of the commercial internet. this was at a time where mozilla was in the first stages of development. the world wide web was still i thought over in geneva.
there's a lot that's happened since nafta was negotiated and this was long before digital trade was actually an area of focus in a trade negotiation. so back then we didn't have online marketplace. we didn't have the cloud. the app economy was nothing anybody had thought of. smart manufacturing, internet of things, precision agriculture, machine learning. these are all science fiction at the point that nafta was negotiated. since those days the internet economy has grown into the largest and fastest growing sector of the u.s. economy today. this is directly employing nearly 3 million americans. it's obviously related to many, many other jobs that are related. and it's actually a really strong point and a point of strength ever used economy
because we have a massive surplus in digitally delivered services, and that's $159 billion when it was last looked at in 2014. so not only is the internet transforming the u.s. economy, but it's transforming trade in a fundamentally positive way. when nafta was negotiated it took massive capital and resources to participate directly in trade. and today hundreds of thousands of u.s. small businesses better internet enabled are able to access customers in mexico and canada with the click of a button or the swipe of a nap. -- app. at the same time there's a lot of good stories in small business but is also a traditional industry story from financial services to flat rolled steel to dairy, to
appliances. everybody is relying on the internet today, and the tools that the internet enables are helping for the global competitiveness for these industries. there is a statistic 75% of the internet benefits are actually, they actually go to more traditional industries. so with that we really think that it's not only about internet companies, it's not only about small businesses, developers, entrepreneurs, content creators, but it's really about almost every sector in the u.s. economy. so shifting to nafta, nafta when it was negotiated, you do a search of the text, it doesn't say the word internet anywhere within the agreement. it has little on the information flows, the intellectual property
chapter has some detailed rules, but overall doesn't have the provisions of that are critical to the internet economy. and to be honest, those provisions of u.s. law hadn't even been put in place. those were not in place until the late '90s. so nafta clearly has some places that not only is our public policy developed quickly that we could really look at update. someone other use of this puzzle on the internet economy and digital trade is that without tpp, we have no global standard that's been agreed upon widely on digital trade. so i believe that it's the center for the u.s. to really see this as a huge strength of our economy and move very
quickly to complete rules in the area globally that will allow our companies to function in the future and not be blocked as, just because they are u.s. companies. i really think that, whether it's a nafta or some other by laterals that are being discussed, we need to move quickly to crystallize the rules in the digital trade space so that we are the ones around the world leading, leading. so just, i'll go quick but in terms of nafta, we see some pretty important updates in the e-commerce space on data flows and digital services. so this would be the free flow of information and data localization restrictions. we also see intermediary liability that here in the united states has been a
principal in our communications and decency act since 1996 that allows individuals to post content on any number of services. this could be a review on an e-commerce website. this could be a cloud-based service that is hosting content for one of their customers. you are able to host that content freely, and at the end of the day the internet service is not liable for what that content is. so we actually in the u.s., see section 230 of the cda as a critical component of our domestic legal apparatus for the digital economy. so we see that as a place that should really be included in future trade negotiations, including a potential nafta we write or renegotiation. i think there's also some other places, open digital markets.
nafta allows for some broader cultural carveouts that limit the distribution of u.s. content through internet services. we see areas like in kitchen and source code that would be really -- encryption -- to get some rules and. we would also push for, look at some unnecessary regulation of online services that we are starting to see pop up in many countries around the world. so shifting to intellectual property real quick, again, as i touched on section 230 of the cda, in the intellectual property space we also see safe harbors to posting online content as critical for the growth for the digital economy. so two places that i would hope negotiators would start looking quickly on fair use, which is a limitation and exception to
copyright. this essentially without it, the internet economy doesn't exist. u.s. innovation leadership doesn't exist. these provisions allow web searches, machine learning, text and data mining, gives cloud-based technology the ability to copy content without the explicit permission of the copyrighted material, and then share it. obviously, there's mechanisms in place to protect against theft and illicit activity and we fully support those, but for the online ecosystem to work and function appropriately, we need to see some limitations and exceptions in this space. again, back to safe harbors and this is also critical for the
copyright space as well. so this is portions of our digital millennial copyright act, and many of these provisions were negotiator in tpp, but we don't see tpp as a starting place, finishing place, etc. i think we see it as a good reference point, but there could be other areas that we want to move forward in as well. lastly i just want to mention and ralph will probably jump in here as well, but customs and trade facilitation are also critical internet enabled businesses and what we call micro businesses which is often just the one person sell in middle america that is shipping all over the world. so as we see some of these barriers in the services space we're also seeing barriers on the customs side that, you know, duplicative paperwork and really difficult procedures to get
small packages, very small low-cost packages in. and that's another place that it think we would love to see some work done is on the minimus threshold for small packages, which i think is again a place that really affects the small online sellers. so with that i think we see a nafta or renegotiation as a great for our industries, and look forward to the conversation. >> thanks, doug. it's hard to follow doug. i'm not going to try. it warms my heart to hear you mention the minimus. i've been talking about that for many years before anybody had ever heard of it and i'm glad to see other people are now seeing the importance of it. i'll get to it a little bit later on. antonio, we are a company that
is proud to stand up and say we support nafta and it's been good for fedex and for our employees and for our customers. we are moving 12 million packages a day and a lot of those are around north america, of all of our customers shipping goods back and forth across the border. mexico and canada are second and third largest trading partners, along with some on the other panel about the importance of this. i think it's a borderland somebody fax. we do make things together, the u.s., mexico and canada, and that it's a great strength for all three economies. the fact that we access to the unique value added and competitive contribution of mexico and canada makes the united states that much more competitive. so what works for all three of us, it is a win-win-win. it especially works for the united states. there were 14 million jobs in the united states that depend on trade with nafta or with canada
and mexico. and trade among the three countries has quadrupled over the 20 years since it was signed. 40% of vaccine exports to the united states are american content. peterson institute has a study out that says that nafta makes americans or the united states $127 billion richer every year. so it's incredibly important for all three of our economies. the automotive industry has been discussed a lot. i think it's the poster child for how the modern supply chain works and how integrated the three economies are. the average car and all the parts that go into it crossed the u.s.-canada border say seven times. a car seat, article a few weeks ago, talked about a simple car seat had the component parts made in four different u.s. states and four different
locations within mexico. that's the integrated nature,, and it's a good thing. it makes the united states economy more competitive, not less. and, in fact, if u.s. manufacturers did not get access or had thei access limited or ps went up to mexican and canadian value added inputs, it would have severe disruptions to our supply chains. it would make the united states manufacturers much less competitive. you know, think about it as some would sit last panel, you don't realize something to you don't have it. we have two good examples over the last several years about how the destruction to the supply chain, how bad it can be on business and the economy. the tsunami in japan, if we remember that, the dramatic impact that had on u.s. manufacturers who are suddenly cut off from their component parts suppliers, and huge impact that had. similarly, a volcano in iceland
years ago when i was in brussels cut off airspace across europe, and that at massive implications across supply chains that were relying on goods coming in from other countries on airplanes. i think we need to keep this in mind when we think about the importance of nafta. so our view is that a bedrock principle of nafta must be maintained and that we should not erect any new barriers to trade among the three countries. that said, i can come lots of questions about where to go from your elbow can be improved and if we're going to have a full negotiation or a partial one, as has been said there are a lot of good principles, modern principles that have been agreed by mexico and canada which could be implemented. for us we've got one particular instance, and ari talked about it, and that's, i would forgive dull exploit as well as making things more modern. i was going to do a slide but i
couldn't do it. this is a picture of the u.s.-mexico border. there are seven lanes across of trucks waiting in line going back goes to the horizon, as far as you can see. the address truck crossing on the border takes 17 hours. it takes three different drivers just to cross and one mile space. one driver it to the border, they unhook the trailer, give it to another driver, he tried to cross, unhook it again and then gives it to the next driver who will drive it to its next destination. there's got to be a better way, right? we can use nafta to make all,, take advantage of all the technological advances that have been achieved over the years and create a truly seamless border. see most but not, right? data and technology can both make the border more efficient and more secure at the same time.
we would like to see nafta take this on. the u.s., we are the chair of the u.s.-mexico ceo dialogue, and we had been working on ideas to improve the movement of goods across our southern border, and there's some great ideas there. canada and mexico have been doing this through an initiative called beyond the border that's been going on for years. they have made great progress. the u.s.-canada or insufficient and they had some great ideas. nafta would give us an opportunity to take the best of those ideas, implement them on the border, make it part of the agreement and really take a lot of cost and time out of the border crossing. finally, mentioned de minimis. you may know that u.s. goods going into canada, everything over $15 pays duties. going into mexico everything over $50 into mexico pays duties. coming into the united states, its $800.
anything up to $800 is a duty free. this is great for the united states. we did this because we saw it in our own interest. nafta gives us an opportunity to address this imbalance and create a truly global and powerful e-commerce platform where all three countries could trade, small businesses could sell to one another across the border. the united states would have a huge benefit in selling goods made here and imported here in the united states to consumers both in mexico and canada. it's a huge opportunity to modernize our trade relationship and that something if we have a renegotiation would be a good idea. >> thank you for having me. thanks to ken and wita for inviting me. pleased to be her to represent the interest to the dairy industry. international dairy foods association is a trade association of about 525 members. we represent all the people who
take a gallon of milk and process it into food milk that you drink, g she may eat, yogurt you may eat, ice cream that some of you in the mail room may eat occasionally and in confinement and many other ingredients that are in milk. very pleased to be here. i too would like to add my comments in support of mexico and the relationship we have with mexico as i explain the other day when is visiting in the embassy here in washington and as antonio said earlier, there's also investments are mexico into the u.s., especially in our dairy industry. so as we think about nafta from the dairy industry, we see them in two different worlds. we see great benefits from nafta. food and agate, trade is quadrupled from about 9 billion
to 36 billion, something in that range. supports a lot of jobs in food and agate. we have about one point 4 million jobs supported by food and agriculture. it's a large industry. we are currently exporting milk over the last 20 years, our milk exports have increased from the less than 5% to over 20%. our production efficiency per cow and her total milk production is increasing every year. and today went our farmers milk cows, probably no one indigenous ever milked cows, but if you were to milk cows, you know it and talking about, if you are to be milking cows you milk cows one to a week because of the export market. exports are extremely important to us and mexico is an extremely viable trade partner and extremely viable market to us. we export about 4.7 billion in dairy products, and about 1.2 billion of that goes to mexico.
that trade with mexico has been increasing, and we have a great relationship with mexico. so our main issue with the nafta and renegotiation, reopening or whatever we can do with the nafta, our main objective with mexico is to preserve the excellent trade relationships we have with mexico. in terms of canada, we have a different story with canada. we have been in the news frequently. i was interviewed last night on canadian tv. i was interviewed a week ago with the canadian tv. we have joined together with the national milk producers federation which represents that dairy farmers, the national association state department of agriculture which is the 50 state tags secretaries of the u.s. dairy export council to voice our concerns for the new administration over policies that the canadian government is doing that is foreclosing about $15$150 million worth of the day exports to canada. with some other new pricing strategies that are doing in
ontario that we fully expect, according to the reports in the media, that they intend to extend across all provinces of canada. so we got ongoing issues with market access with canada. we will continue to push those. we are concerned that those current pricing schemes on the strategies will also spill over into not just the domestic canadian market that forecloses our companies located primarily in wisconsin and new york at the current time, it will spill over into the global markets as they start subsidizing exports, milk powder to the world. we are watching canada. we have strong interest in what's happening with dairy trade and market access in canada. if the negotiations continue, the renegotiations, however the
process plays out, we intend to be at the table. we intend to make sure the act enters a special of the dairy interest, are well represented. agriculture site were always come as was mentioned earlier with the example of years ago about the trucking industry at the trucking issues, we will be mindful of any efforts to retaliate against agricultural products. because of all of the goods and services, food and agriculture are services that every citizen around the world needs. and we also see one of the things mentioned earlier, was national security. we see food and agriculture as being a piece of the national security peace as well. and although it's a topic for another panel, when it comes to food and ag, our top markets are canada and mexico with china fast approaching. so we will be mindful of issues with china as well. but today's discussion is about nafta. so we will be there.
we'll be looking to make some improvements, perhaps in some of the sbs agreements, making this more transparent, making this have a speedier process. some of the stuff we were able to negotiate with tpp, and we will also be watching the intellectual property, and as it comes to dairy whenever big issues, this is an indicator for things like feta cheese and those are the kind of things which have been for those of you and a look at the audience i see many of you that a been in the trade battles for many years, you know i would be remiss if i didn't mention indicators when i talk about dairy. so with that i will turn it over. >> thank you so much. in the interest of time, let me see if i can speak in headlines. sarah with whirlpool, headquartered in the united states. we manufacture appliances for the u.s. market and for many
markets. we are an exporter, and importer. we have 25,000 u.s. employees and 100,000 employees worldwide. north american market couldn't be more integral to our business. candidate is a very important export market, and our global operating platform positions us to manufacture in mexico for mexican production. and 80% of what whirlpool cells in the united states is made here in the united states in states like ohio and iowa and michigan, and of a rust belt where a lot of folks came out to vote in this last election. three quick principles. as we think about nafta, the first is to not pull up the drawbridge. allow us to keep things in place. place. let's look at where we can refresh some of the principles that we negotiated 23 years ago. 23 years ago i think i was in grad school, probably reading
economics book. joe stiglitz, i think we got the macroeconomic stuff right. we can see the benefits to the industry, to the geopolitical issues, but in hindsight i think there probably is some reconsideration that has to be looked at on the microeconomic level. those are the communities in which we live and operate. and as any of you and i traveled around the united states, there are many small towns where you see sort of these displaced workers and communities. and while i don't associate that to nafta, it certainly raises the question of how did we get that trade adjustment? did we get the retraining right and -- on that side of the equation? did we get the enforcement equation right as part of the
macroeconomic upside? yes, indeed, there's no question that we embrace nafta and our workers embrace free trade, but we are also, think we need to ensure that if the institutions haven't kept up to the realities and the results of open and free trade, then we may have to take another look at updating and modernizing not only agreement by the institutions that enforce them. so renegotiation, renegotiating nafta in my mind is doable, and we hope that it will be done under due process with a notification parade to congress. and it will be done under what was i heavily thought for tpa so the congress and the administration can work and due process and solicit industry and other stakeholder feedback to get it right. the one thing i guess i would say just to supreme court off of
a couple of you folks is that a think one of the things that is an opportunity is we are a couple of cycles past the post industrial. when we negotiated nafta. if you step back and look at where we are, we are even passed the i.t. cycle and the internet of things, and we are now more in the knowledge economy. so there's a lot of intangible things and services that go into pricing issues that go with updating this agreement. and so when we take a look at renegotiating this agreement i i think one of the things that hardens me is that we are going to have a number of business principles renegotiating the agreement. what i mean by that is if you take a look at the administration, folks like wilbur ross, the potential of designate for ustr, there are a number of grown-ups who have lived nafta, whether was in the
textile and apparel industry or the steel industry. i think that seeing both the upside in terms of wall street validating and the street validating the integration of the economies, and also the downside through some of their communities and small industri industries. let me just do what my other fellow panelists did here, i bet is to say if we were to take a look at nafta and focus on particular areas of deeper dives, one area that would be appealing i think to whirlpool and to her industry writ large is in the areas of rural origin. the same conditions that brought us to tpp haven't changed. those realities are the same, and that is that we are operating with rules of origin that don't recognize where we are or what we are making today. and that is also true in manufactured goods, not just in some of the i.t.
and to that end, there are rules of origin that could actually benefit from another look. and this is not in any way specific to mexico or canada, but it does beg the question of what was negotiated 23 years ago, is that relevant today? let me stop there to give the floor back to you all and to doug. >> thanks, sarah. thank you all, panelists. that was fantastic. as i sit here and listen to the windows nearly blow up from the wind i would suggest one thing we add to the negotiating schedule is more important mexican weather and less export of canadian weather. sorry. we are open for questions. i think you have heard from for key sectors of the economy and with that we would just go straight here. either one. you can fight each other if you want. brian and bill.
>> thank you. great panel. nice to see you all. a lot at the discussion today has focused on mexico, not entirely but a lot of it has been. there's been some reporting that the administration may try to make a nafta renegotiation mostly about mexico, kind of winking at canada, hey, it's not really about you. it's about mexico. my question would be if that would be from your perspectives a politically feasible approach in the united states? tigta with respect to you, michael, in the united states industry i one heavy ag industry would feel about a nafta renegotiation that is largely left candidate untouched? >> thank you. for those of you who don't know brian, one of the best trade experts in washington, d.c. so thank you, brian, for the question. for us obviously we want to see canada be a major part of any
renegotiation for dairy. and we are working on our concerns about canada, whether those renegotiations or not. because we have significant issues and they boil down to market access in canada and excessive tariffs on our products like yogurt and ice cream. we are going to be pushing to preserve what we have with mexico and aligning with mexico on the current arrangements we have on trade and we're going to be pushing on the canadian side for greater market access. >> bill lane, and great panel. let me first of all correct one thing. there was no internet when we negotiated nafta but we really were proud because fax machines had come out and they were really cool. i don't know if a lot of you know this or not but cc stands for carbon paper, or carbon copy. we were getting rid of carbon copies and that was another big
deal as far as -- it was cutting edge. my question to you is regarding your customers. to make all this protection is stuff work we have got to raise prices. and particularly it seems strange that we're picking two countries that are the greatest consumers on a per capita basis, well, on any basis, of american products. our number one and number two export market are canada and mexico. you put them together, 150 million people out of 7 billion people that live outside the u.s., and they consume one-third of our exports. it's pretty good. put another way, the average nafta consumer buys 38 times more products than the average chinese consumer of american products. so i want you to think about your customers. if we're going to raise prices a lot, 35-45%, and i guess that's a starting position as far as the tariffs, how price elastic audio products?
will people gladly pay that for some assembling jobs coming to the united states or some selling jobs and what have you? or will they resist? with a fix up their old car? want to keep the old electronics and what have you? will elasticity of your products and the fact that we're going after our two biggest customers of american products. >> i've been volunteered. there is no one i would rather to then bill lane. a great question, bill, and from the perspective of perhaps the appliance consumers, it's a function of price and quality, manufacturers options, bills -- bells and whistles, performance. select the end of the day it isn't just price but i don't see anything but an opportunity actually to keep the prices competitive at the end of the day, it's not, put aside the protectionist language. i'm not sure it's appropriate
here. i think what you got to think about is actually beyond that, and that is in terms of competitive trading block. and i think the biggest fear for me as someone who cares deeply about free movement of goods is how do we preserve the right for this hemisphere to compete globally? and are some enhancements they need to take place in the supply chain and in the trucking. yesterday i got a note about products, and it is our biggest market and we got trucks at the border going through new bio screening. those are the issues that inhibit the movement of goods and cost us money, and are something that ultimately would get passed through. so i actually think there's an opportunity to get it right and for the competitive and maintain prices where they are. >> i guess i would just a quick on geographically, canada and
mexico for a lot of our users, just based on the portability of services, i think there's a lot of times much more likely to travel to canada or mexico with a smart enabled devices where they're going to want to the exact same services they do at home in the united states. to the extent that there are issues that may be restricted different content distribution or as i mentioned earlier some of the different cultural carveouts for canada, i think that there, that is something to think through. >> i would just make the point that has been made before, but that tariffs and price increases that result from tariffs hit the poorest among us the hardest. close, footwear, the things that the working class spends a higher percentage of income on are the ones that have usually
the highest tariffs. and those are the things they get caught up in retaliation. and so we get into this retaliatory spiral, it's the folks who can least afford it will end up paying the highest price. >> thank you. american shipper magazine, and it's adam smith project. two questions, just curious if we go into more detail about what the manufacturers like whirlpool are looking for any potential nafta renegotiation. and then haven't we kind of renegotiated nafta with the transpacific partnership? wouldn't that it implemented a lot of things that we seem to be wanting? >> i think that question actually, your second question may have answered your first question. we were proponents of the transpacific partnership.
there were a lot of really thoughtful chapters in that agreement, and i think it's something that should be leveraged as we look at nafta. not only as i mentioned the rules of origin but in ip and other very relevant components. there are border issues. there is a transportation issues. there are a number of areas, labor mobility. i have on my list mutual recognition of standards and testing bodies. so a plethora of opportunities if that helps to answer your question. >> we have three over undecided. >> -- over on this side. >> i just want to see if you could comment a bit, given the fact the president of united states has said he intensely dislikes nafta but has never been specific about what he dislikes, and the only thing he has mentioned is increasing
tariffs, things are looking for a dicey. i wonder if you are communicating with your employees, too, and what is at the strategy to have this more intelligent renegotiation? because if tpp has already been shut down and that was what a lot of the content implied, how are we going to get around this politically, and what are you as companies are doing to ensure the more positive outcome? >> speaking for fedex, we just launched just a couple of weeks ago a new initiative, that came from our chairman, to all of our employees. communication to them, making the point that all fedex jobs are trade jobs. that everyone who works for fedex is somehow responsible for and supported by international trade, because that's our business.
and we are putting signage up in all of our facilities so that everyone sees pictures of individual fedex workers saying trade is important to my job. and there's a mechanism to send letters to congressman, and i would say that the response was phenomenal. our employees were incredibly engaged, receptive to this message. and so we're excited about this, and as you know, our chairman has been very vocal about the importance of the trade. so we will be continuing to educate our employees one forward and we think and hope that other companies are going to be doing the same, that we can't, we can't wait until a few months before a big trade vote to start ginning all this stuff up. we've got to do it in an ongoing constant basis if we are to make a change in the debate.
and so we're prepared to do >> i think when it comes to agriculture, not so much employees but when it comes to agriculture individual farmers, there hasn't been another sector that has been more supportive. the reason i think quite frankly is we know there's going to be another couple billion people added to the planet, and with good to be looking at a situation where 95% of the consumers are going to reside outside the u.s. borders. we are going to need trade. i think another aspect to your question, obviously in the last elections are a lot of people who feel differently about that. having grown up in southeastern kentucky will get almost everyone either in the family or a relative worked in a sewing factory, in a garment factory, and those were gone almost overnight or i'm not saying that's a good thing or a bad thing. just saying it happened. and if you talk to the people who did those jobs come at a think that was a point made on the previous panel, to those people it's a real serious issue. issue. and some of those new jobs that
have been created, and many new jobs have been created, they haven't all been re-created in the same geographies and so clearly it was a message in the last election that there's concern about job loss and whether right, wrong or indifferent it's been equated to trade. and i think there are lots of factors with job loss. automation new technology for one. instead of packing boxes and lifting boxes as your job, your job now is probably repair a robot that does set to 247. so lots of different sponges saying the last election clearly there's a strong feeling that we got some kind of balance -- imbalance. that's it and pick up while we are hearing all the rhetoric we're hearing about trade. >> maybe just a quick comment from whirlpool. whirlpool is the last standing major u.s. home appliance manufacturer, but it's in a very competitive global dynamic and
our employees care deeply that we protect their jobs, 15,000 manufacturing jobs in the midwest. so as we pursue and advocate for open markets, we also embrace competition. we believe we can compete with anyone anywhere by the same rule of law. so part of that communication with employees is that we embrace can we do not run away from these opportunities to stay in a grid as a global economy, but we're also going to fight for fair trade and make sure that we are working to protect those jobs so that we all are playing by the same rules of law. >> thanks. nelson, your comments are all so thoughtful and well presented and well thought through.
any traditional trade negotiator would be crazy not to be sitting down with you and getting input before rolling out new trade negotiations. so let me ask the question that i asked thea lee. do you all feel you have input into the administration, meaningful input and a dialogue with those are going to be doing whatever they're going to be doing with nafta? >> we are working at that, yes, we have input today. obviously would like to have greater input. i think that's always the way of industry. we always like to have more input, but we're working on that and just we feel as though we have input and once the rest of the cabinet gets put in place we willth they are in place advocating our positions on these things. one of the other things you commented on was competition. we had our major dairy meeting in the january i guess last week or two weeks ago, and i heard something there that really
struck with me. and that is that competition spurs innovation, and policies picks winners and losers. and i think competition is extremely important, and after your comment, that's where our innovation comes from, and we have to continue to innovate and continue to compete. >> and i would just say we're looking forward to engaging with the new administration, whether it's commerce department, fdr, otherwise, we're ready to do that. i do think we would be remiss if i don't mention transferred into being such a big issue in the transpacific partnership and a lot of opposition groups ended up using that as a real wedge in terms of whether they could support a deal or not. i would just say from our perspective we hope that as this negotiation or others are looked at, that there is a real big effort put into public consultation, working with civil
society groups that may not have been included in past negotiations. our industry, we're relatively new to all of this. the trade world, so just in the tpp was was the first time that are industry really thoroughly engaged on a whole wide range of issues. so i think that not only is it bringing in new industries, new sectors, but it's also making sure the public is kept apprised of what's going on. >> i'm going to take a brief moderator's prerogative i guess a whatever call it. as this administration starts to put a senior people in the next ranks of people and, this is the time to strike. you make the cookie dough while you're preheating oven, not when the oven is hot. you need to get in and do the education to give you understand this is a different administration and past ones. it's not obama versus bush administration fight over whether trade agreement should have higher label -- labor
standards. this is a completely different divergence in a lot of ways. i think every industry, every sector, every trade association that's interested in preserving what we have in nafta, what we had in tpp, which was a pretty good agreement i think in most sectors of use, even hours, you need to be able to preserve that answer to push forward. i think that education is more important now than in the past. by the time the people who actually know what's going on or in place and started to make the decisions, be better off understand how much there is if you go to a protectionist, throughout the barriers can resurrect the bodies of smoot-hawley or whatever. and go down that road. there's some fairly -- on the transition, during the campaign. i think i think it's important everyone in the gym to go out and make
sure that education is done a a bit of their company, association, their sector so there's an understanding and awareness of things once they start to have these conversations. yes? >> thanks so much for your comments. you talked about the role institutions can play in retraining workers. i was wondering if there's a role industry complete in that regard and what that role could be that if that's going on and if you could just be more specific about your work in that area? thanks. >> with all due respect, my name is bill earl, national association of beverage importers. with all due respect to doug, if you look at the voting population i don't think we have as many canadian, former canadian voters as we have a latina or hispanic voters.
the last election had about 12.5% and growing of hispanic voters. but voters are also customers. as we see perhaps the tipping point coming in that segment of the voting population being more important, how do you relate to those voters in the context of this nafta question, and it being sort of a sharp stick in the eye of that hispanic voting population? >> perhaps i could tackle the adjustment question that you asked with institutions keeping up. and also give some credits to nelson. i'm a traditionalist and i would love to see some due process in terms of the 90 day lit over with congress but also issuing of the federal register seeking industry and agricultural input. that is the best way to collect data and methodically examine
priority. but i also think in this new era that i referenced of a knowledge economy, we will also have to be telling our story out in the public, and really telling our stories in a way that resonate not just with our employees but with our communities. on the outside of trade and of the areas where we need to make adjustments in communities. so in the public side of the equation, trade adjustment assistance and those types of initiatives, stronger enforcement bodies, i can tell you how many times commerce has come to us in years and said we do have enough staff to do a cost of verification, we are not properly allocated and set to deal with these agreements, we got to update our organizations to keep up with our aggressive trade agenda. on the private side one of the areas we are exploring and hitting many companies are doing this in their communities is working with worker training programs and community colleges to look at what is the next generation of employees that we need to hire him and getting
early, even high schools and the first couple of years of college, community college to train in particular trades. we see a real dearth of opportunity, a real dearth of labor in many markets across the u.s., and that's an area where we need to reinvest for a quickly and where the private sector cam through internships and partnerships get these workers new experiences and get ready for the next 10 years. >> yeah, i think there's a role for business, certainly. and i think the u.s. is behind, if you look at a lot of other countries in terms of the degree of importance that they place on having their workers trained and retrained for the jobs that are being created in their economies. economies. i think far too long we have neglected this, and i think part of the positive they can come
out of this discussion is with some serious discussions on ways that the u.s. can improve in this area. i think there's a lot of ideas out there that we can look at if we sat down and said how do we really move our economy and our workers towards the higher end of the value curve? what i'm concerned about is we are hearing so many policies that would actually take us down the value curve towards the lower skilled production. america's great competitive advantage is in the higher skilled high technology industries. and we will win that competition around the world. and that is our strong suit going forward. but we've got to have the people that are trying to do that. thousands, hundreds of thousands of jobs are unfilled around the country right now because we don't have the right match of skills. to address those, protectionism is not the right answer. addressing those worker skills and skills gaps is the right answer. i think denmark, i heard bill
give this example, denmark has a program where there's a public-private partnership, the government will give money to retraining institutions, whether they're private or educational institutions. they pay them 25% up front and they don't pay the remaining 75% until the person that's going through the retraining gets a job. and we have never tried things like that. i think there's a lot of things we can do to improve in this area, and i think we should. >> i think with that we're going to wrap up. i want to thank our panel. thanks for all your perspectives and your insights. want to remind everybody we are going to have another event in this room i can just a week from today to look at, do a deep dive on china trade. i think we'll have a vigorous debate and discussion like we did today. of course the march 3 with congressional trade council. we look forward to seeing you all at future events. thanks again to the panel.
[applause] >> on this friday morning the senate coming to session momentarily continuing the debate on the nomination of steven mnuchin to be secretary of the treasury. senate is scheduled to vote on his confirmation on monday at 7 p.m. eastern. live coverage of the senate here on c-span2. ty god who inhabits eternity, thank you for also dwelling in contrite hearts. today meet the needs of our lawmakers from your celestial bounty. strengthen their hearts in your ways against temptation, and make them more than conquerors in your love. in all that they say and do, may they seek your